Bad feedback is good for business - but surprisingly hard to find

Ever since getting sent to the teacher’s office, and receiving that bad feedback about behaviour or school work, we’ve all been indoctrinated with the view that bad feedback is, well, bad.

If you asked the majority of business leaders today, you'd most likely find a similar attitude at work within the complaints and feedback culture.

Bad feedback is bad, it’s to best avoided and reduced. It’s no surprise that Kenneth Chenault, the CEO of American Express has said, “Regular feedback is one of the hardest things to drive through an organisation.”

The majority of businesses have historically been focused on reducing the complaints they receive. Many KPIs for complaints departments focus on driving down the number of complaints received month on month.

The world has been a-changing

The problem is that whilst businesses have been busy driving down complaints (resulting in companies making it harder to complain, making the process longer, and handling them poorly a staff cuts bite) the world has been changing around them, making it more important than ever to actually increase complaints and feedback as a way of staying competitive and increasing customer referral.

Not that long ago, your customers only ever really interacted with sales staff. They made a purchase and got on with their day. The ongoing relationship with real people was often negligible. The web, and the way we now buy things, has changed all that for good.

Subscribe rather than buy

Consider how many things you now subscribe to, that you used to buy:

• We stream our music instead of buying MP3s.
• We subscribe to online grocery shopping delivery rather than flitting between local stores.
• We subscribe app stores to get software rather than visiting the local PC store.
• We purchase clothes and accessories online through a long-term relationship with brands that deliver for us.

So our relationship with businesses has changed out of hand in even five years. What was once a cursory exchange with someone on a till is now a long-term purchase-and-support cycle that requires a lot of communication, authenticity and skill. It means that what was once your back office, or “support team” is now firmly at the front. They are the primary deliverers of customer experience. It means that if you get it wrong anywhere along the cycle, you need to know fast.

Customers might buy online. But what then?

They have a query, they need to send something back, they want ongoing assistance. Remote, ‘pay-as-you-go’ buying takes a lot of regular interaction to keep the revenue flowing.

Every interaction makes a difference

The importance of measuring satisfaction on a per-communication basis during the purchase-and-support cycle, given the likely lifetime value of your customer, is now essential.

So what if companies actively encouraged complaints? What if they solicited feedback, both good and bad, from all of their customers in an attempt to get an accurate picture of how their business or team is performing?

The fact is inviting complaints from customers is one of the very best ways to improve both your service and your customer retention.

The mad-to-glad paradox

Companies with the best customer service understand this paradox: customers are often more loyal after a service failure (so long as the recovery has been swift and good) than customers who have not experienced a service failure at all.

Jake Poore, who handled service recovery techniques for Disney has pointed out, "everyone makes mistakes, that's human. But how do you solicit those mistakes and rectify them so that the story is now possibly better than if there were no mistake at all?" He makes the point that customers who go home mad tell their story, whereas those who go home happy tell your story.

Often a bad experience that was quickly rectified makes for a delighted customer and a more viral story than a customer who had just an 'OK' experience. Remember, you can only benefit from this effect if you solicit that bad feedback on a regular basis – otherwise you’ll miss some great service-recovery opportunities.

Feedback is the breakfast of champions

Ken Blanchard pointed out that the best companies feast on all feedback rather than shying away from it. This task is made all the harder because the vast majority of unhappy customers (96% according to Ruby Newell-Legner) don't bother to complain, they simply walk away. So a business is hearing from 4% of its unhappy customers! Imagine what the other 96% could tell them.

The strategic changes and market insight that can be gained by gathering feedback from the universe of customers cannot be understated.

The business can also benefit from the positive word of mouth generated when it acts swiftly to rectify issues. How many of your customer survey report actually changes something within your business?

Personally, I cannot recall a time I filled in a customer survey with negative feedback and have had any kind of return communication from that business. We are often very good at measuring anything that moves but not quite as good at making those measurements actionable. The problem is, nothing changes for the customer.

Straight from the horse’s mouth

If customer service is important to a business, and they demonstrate it at every opportunity by asking customers how they can improve, the staff will become acutely aware of how their actions impact customer satisfaction. It becomes part of the fabric of the way it does business.

It is much more impactful on staff engagement and satisfaction to have feedback from a customer than a boss in many instances.

Many companies struggle to keep the customer at the heart of their business. Over time, processes, new staff and market changes can obscure the original vision of the business and make it difficult to be truly customer-centric.

The best customer companies bake customer feedback into the heart of business operations, using it as a common language to encourage staff to understand the impact of their actions, and perform better.

Encouraging feedback from a Generation Z

Since Generation Z often ‘go social’ and vote with their Facebook feet about service they’ve received, CMOs must work more closely alongside customer services directors and CIOs to critically appraise their feedback mechanisms for the 21st century. It’s time to swing the business focus from customer acquisition, to customer retention.

After all, acquiring new customers costs six to seven times more than maintaining existing customers (Flowtown), so it's no wonder boosting customer retention rates by just 5% can raise profits by 25% to 95% (Bain & Company).

The key is that bad feedback quickly. Customers are mobile, social and busy. It's time to do away with annual customer surveys and paper-based comment cards, and get quicker, smarter and more transactional about the way they seek feedback.

Once a business is in a position where it is getting insights into bad feedback and, more importantly, acting upon it, there will be a huge impact on retention, profitability, continuity and scalability. Surprisingly it also has a positive effect on new customer acquisition. Existing customers who are delighted by a business' treatment of them will tell their friends and colleagues.

By seeking feedback from everyone who buys, positive and negative, and taking swift corrective action, we give ourselves the very best opportunity to keep customers happy and resolve issues we were previously unaware of for future customers.

Asking people if they are happy once a year won’t let you to capture and fix issues during the long customer journey. The phenomenal Elon Musk sums it up well: “I think it's very important to have a feedback loop, where you're constantly thinking about what you've done and how you could be doing it better. I think that's the single best piece of advice: constantly think about how you could be doing things better and questioning yourself.”

Lindsay Willott is CEO of http://www.customerthermometer.com.